2015-08-19

Wealthy Chinese Investors Flee China's Stock Markets (video)

Chinese stocks tumbled the most in three weeks as traders reduced stimulus bets and speculated the government will pare back efforts to prop up equities. Data Tuesday showed home-price gains are spreading, with new-home prices rising in 31 cities of the 70 the government monitors, from 27 the previous month, according to data released by the National Bureau of Statistics on Tuesday, August 18, 2015.Bloomberg quote: SHCOMP:IND

"The wealthiest investors in China’s equity market are heading for the exits. The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency... The median stock on mainland bourses traded at 72 times reported earnings on Monday, more expensive than any of the world’s 10 largest markets. The ratio was 68 at the peak of China’s equity bubble in 2007, according to data compiled by Bloomberg ... “Wealthy investors, who have been through bear markets, are better at exiting,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology... investors are finding alternatives in Chinese real estate and overseas markets... The yuan’s retreat to the weakest level since 2011 is increasing the allure of assets denominated in foreign currencies, according to Steve Wang, the chief China economist at Reorient Financial Markets Ltd. in Hong Kong. Yuan positions at China’s central bank and financial institutions fell by the most on record last month, a sign that investors are moving money out of the country. “China’s capital outflow in July coincided with big investors selling shares,” Wang said. “Small players have been drawn in by government measures to support the market, while wealthy investors cut their stakes.” source: Bloomberg Business, August 18, 2015(emphasis added)